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Kemper Costs Rise to $5.2 Billion

Posted
by Evalina Burnett on

An aerial view of the Kemper County energy facility site .

Mississippi Power

Mississippi Power has raised the cost of finishing its Kemper county power plant by another $177 million. That’s on top of a $40 million over-run announced in January. As MPB’s Evelina Burnett reports, the project's price tag is now almost twice initial estimates.

The cost of the lignite coal power plant Mississippi Power is building in east Mississippi is now $5.2 billion. But power company spokesman Jeff Shepard says rate payers won’t pay for this new cost increase because it falls outside of a $2.9 billion cost cap the company agreed to with regulators last year.

"What customers are responsible for, and what has almost all been realized already, is a 15% increase that was granted in the spring last year, and an additional 3% that went into effect in Janury of 2014," he says.

Shepard says the company expects another 3% to 5% rate increase after the plant comes online, bringing the total Kemper-related increase to about 24%.

But opponents of the plant have long questioned Mississippi Power’s cost and rate estimates. The Sierra Club’s Louis Miller worries the rate increases, which he believes will be much higher than the company's estimates, will have a ripple effect throughout the south Mississippi economy.

"Whether you're walking in a Walmart or a Rouse's food store, you're going to be paying that hidden charge, because those people have to keep the lights on, and they're paying this ridiculous rate as well to pay for Kemper," Miller says.

Mississippi Power says delays due to bad weather, high craft labor turnover and unexpected installation ineffeciences contributed to the cost increase.

Opponents have questioned whether the plant will even work once it goes online. Mississippi Power's Shepard says, though this is the first time these technologies have been used on this scale, the individual pieces have been tested and proven already.

"All of the components of the project are all already in existence," Shepard says. "Gassification has been around for close to 100 years already. They already use the gas clean-up portion of the project - those components are already being utilized. Carbon capture is nothing new. It's just that all these components are being put together for the first time at a power plant."

Mississippi Power says the plant should be online in the fourth quarter of this year, though it noted in a regulatory filing yesterday, more delays and cost increases are possible during the plant's start-up.